Section 298 — Companies Act 1993: Transactions for inadequate or excessive consideration with directors and certain other persons

298 Transactions for inadequate or excessive consideration with directors and certain other persons (1) Where, within the specified period, a company has acquired a business or property from, or the services of,— (a) A person who was, at the time of the acquisition, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or (b) A person, or a relative of a person, who, at the time of the acquisition, had control of the company; or (c) Another company that was, at the time of the acquisition, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or (d) Another company that was, at the time of the acquisition, a related company,— the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the consideration given for the acquisition of the business, property, or services exceeded the value of the business, property, or services at the time of the acquisition. (2) Where, within the specified period, a company has disposed of a business or property, or provided services, or issued shares, to— (a) A person who was, at the time of the disposition, provision, or issue, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or (b) A person, or a relative of a person, who, at the time of the disposition, provision, or issue, had control of the company; or (c) Another company that was, at the time of the disposition, provision, or issue, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or (d) Another company that, at the time of the disposition, provision, or issue, was a related company,— the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the business, property, or services, or the value of the shares, at the time of the disposition, provision, or issue exceeded the value of any consideration received by the company. (3) For the purposes of this section,— (a) The value of a business or property includes the value of any goodwill attaching to the business or property; (b) The provisions of section 7 of this Act apply with such modifications as may be necessary to determine control of a company. (4) For the purposes of subsections (1) and (2) of this section, specified period means— (a) The period of 3 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and (b) In the case of a company that was put into liquidation by the Court, the period of 3 years before the making of the application to the Court together with the period commencing on the date of the making of the application and ending on the date on which, and at the time at which, the order of the Court was made; and (c) If— (i) An application was made to the Court to put a company into liquidation; and (ii) After the making of the application to the Court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),— the period of 3 years before the making of the application to the Court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation. Compare: 1955 No 63 s 311C; 1980 No 43 s 28 Subsection (4)(a) was substituted, as from 26 April 1999, by section 11(1) Companies Amendment Act 1999 (1999 No 19). Subsection (4)(b) was amended, as from 3 June 1998, by section 15 Companies Amendment Act 1998 (1998 No 31) by inserting the word “ ; and ” . Subsection (4)(b) was further amended, as from 26 April 1999, by section 11(2)(a) Companies Amendment Act 1999 (1999 No 19) by inserting the words “ , and at the time at which, ” . Subsection (4)(c) was inserted, as from 3 June 1998, by section 15 Companies Amendment Act 1998 (1998 No 31). Subsection (4)(c) was amended, as from 26 April 1999, by section 11(2)(b) Companies Amendment Act 1999 (1999 No 19) by inserting the words “ and at the time ” .